Do Employees Have Useful Information About Firms’ ESG Practices?

Fisher College of Business Working Paper No. 2021-03-21

Charles A. Dice Working Paper No. 2021-21

67 Pages Posted: 16 Dec 2021 Last revised: 11 Nov 2022

See all articles by Hoa Briscoe-Tran

Hoa Briscoe-Tran

Ohio State University (OSU) - Department of Finance

Date Written: November 10, 2022

Abstract

This paper investigates whether employees have useful information for assessing firms’ environmental, social, and governance (ESG) practices. I analyze 10.4 million anonymous employee reviews via a word-embedding model to construct an inside view of corporate ESG practices. The inside view has useful information beyond external ratings in predicting a firm’s future misconduct, governance issues, downside risk, growth, and valuation. In addition, the inside view appears robust to greenwashing, both theoretically and empirically. In various settings including a novel exogenous shock, I show that low-cost changes in a firm’s stated ESG policies do not affect the inside view while more expensive changes do.

Keywords: ESG, CSR, greenwash, cheap talk, employees, NLP, Glassdoor

JEL Classification: G30, G34, M14, M40, D22

Suggested Citation

Briscoe-Tran, Hoa, Do Employees Have Useful Information About Firms’ ESG Practices? (November 10, 2022). Fisher College of Business Working Paper No. 2021-03-21, Charles A. Dice Working Paper No. 2021-21, Available at SSRN: https://ssrn.com/abstract=3987291 or http://dx.doi.org/10.2139/ssrn.3987291

Hoa Briscoe-Tran (Contact Author)

Ohio State University (OSU) - Department of Finance ( email )

2100 Neil Avenue
Columbus, OH 43210-1144
United States

HOME PAGE: http://briscoe-tran.com

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
802
Abstract Views
2,848
Rank
46,922
PlumX Metrics